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SCHEDULE 14A
(Rule 14a-101)
Information Required in Proxy Statement
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the registrant / /
Filed by party other than the registrant /x/
Check the appropriate box:
/ / Preliminary proxy statement / / Confidential, for Use of the
Commission Only (as permitted by
/ / Definitive proxy statement Rule 14a-6(e)(2))
/ / Definitive additional materials
/x/ Soliciting material pursuant to
Rule 14a-11(c) or Rule 14a-12
KANSAS CITY POWER & LIGHT COMPANY
(Name of Registrant as Specified In Its Charter)
WESTERN RESOURCES, INC.
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/ / $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-
6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)4 and 0-
11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/x/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the form or schedule and the date
of its filing.
(1) Amount Previously Paid:
(2) Form Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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Press Release issued by Western Resources on May 6, 1996.
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LETTER TO SEC LISTS 13 MISINFORMATION AREAS BY KCPL
IN RESPONDING TO WESTERN RESOURCES' MERGER OFFER
ASKS COMMISSION TO REQUIRE KCPL TO RE-SOLICIT NEW PROXIES
TOPEKA, Kansas, May 6, 1996 -- Calling Kansas City Power &
Light Company's statements concerning the proposed exchange offer by
Western Resources what it believes to be "materially false and/or
materially misleading," Western Resources' counsel today sent a detailed
letter to the Securities and Exchange Commission listing 13 "misinformation
areas" in letters, press releases and advertisements being distributed by
KCPL and UtiliCorp.
This campaign of misinformation by KCPL, assisted by UtiliCorp,
has been triggered by the emergence of Western Resources' proposed exchange
offer for KCPL and has been calculated to poison KCPL shareholders against
the Western Resources offer even before the KCPL shareholders receive
Western Resources' proxy materials and preliminary prospectus," the letter
said.
"In Western Resources view, as more fully documented herein,
KCPL's misinformation tactics include:
- - - - Making statements that are either simply false or otherwise omit
materially necessary facts;
- - - - Continually representing as "fact" matters that are, at best,
opinion, and, at worst, rank speculation;
- MORE -
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- - - - Continually focusing on customary language in the Western Resources
Preliminary Prospectus informing shareholders about the uncertainties
inherent in forward-looking statements and implying that such
customary language conveys substantial doubt on Western Resources'
part about the statements; this is a particularly insidious tactic
considering that KCPL's shareholders had not yet received the
Preliminary Prospectus; and
- - - - Highlighting potential obstacles to the consummation of the Western
Resources transaction without advising its shareholders that the KCPL
board can remove these obstacles."
"KCPL's campaign of misinformation began with an April 21,
1996, letter to shareholders from Drue Jennings, KCPL's chairman of the
board, president and chief executive officer, unfairly mischaracterizing
the Western Resources offer and urging KCPL shareholders to vote for the
UtiliCorp proposal," the letter states. "It continued with an April 26,
1996, KCPL advertisement repeating many of the misleading statements and
misinformation contained in the April 21 letter. It proceeded with an
April 29, 1996 KCPL letter and advertisement containing more misstatements
and misinformation. Also on April 29, 1996 Utilicorp published an
advertisement entitled 'Merger Facts,' repeating may of KCPL's
misstatements and misinformation."
Wester Resources urges the Commission exercise the authority
clearly granted by Congress to protect KCPL shareholders' right to exercise
their voting authority on a "fair, honest and informed basis."
- MORE -
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The letter takes issue with KCPL's argument that a Western
Resources/KCPL merger cannot produce over $1 billion in cost savings,
compared to $636 million projected in the Utilicorp deal. KCPL
advertisements have misstated and mischaracterized early letters between
the companies discussing preliminary, minimum savings estimates. "Nowhere
in its various statements does KCPL explain how a merger with Wester
Resources (which is considerably larger than either KCPL or UtiliCorp)
could generate less savings than the $636 million projected in the
UtiliCorp proposal." The letter points to extensive analysis done in 1996
to support the $1 billion projection.
Furthermore, when KCPL argued that Western Resources cannot get
90% of the KCPL shares tendered in a "hostile situation," it apparently
forgot that its own offer in 1990 for KGE contained the same requirement,
and that its financial advisor, Donaldson, Lufkin & Jenrette (now
UtiliCorp's advisor) said at that time it was "entirely possible that more
than 90% of KGE's outstanding common and preferred shares will be
tendered," even if the offer remained hostile. The same advisor insisted
that statements to the contrary were "misleading and distorted the
likelihood of a successful acquisition of KGE by KCPL" according to an
affidavit filed by KCPL with the Federal Energy Regulatory Commission.
The letter also pointed KCPL's mischaracterization of the
Western Resources proposal as placing more risk on KCPL shareholders than
the UtiliCorp deal. It pointed out, "declines in
- MORE -
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stock price [of UtiliCorp] will also be borne by KCPL shareholders and ...
the magnitude of that decline to KCPL shareholders will remain unchecked."
In contract "the Western Resources 'collar' provides assurance to KCPL
shareholders that they will receive $28.00 worth of Western Resources stock
as long as the price of Western Resources stock ranges between $28.43 and
$33.61."
For a copy of the multi-page letter, refuting point-by-point
the 13 areas of misinformation statements by UtiliCorp and KCPL, contact
Michel' Philipp at (913) 575-1927.
Western Resources (NYSE:WR) is a diversified energy company. Its utilities,
KPL and KGE, operating in Kansas and Oklahoma, provide natural gas service
to approximately 650,000 customers and electric service to approximately
600,000 customers. Through its subsidiaries, Westar Business Services,
Westar Consumer Services, Westar Capital, and The Wing Group,
energy-related products and services are developed and marketed in the
continental U.S., and offshore. For more information about Western
Resources and its operating companies, visit us on the Internet at
http://www.wstnres.com.
A registration statement relating to the Western Resources securities referred
to in these materials has been filed with the Securities and Exchange
Commission but has not yet become effective. Such securities may not be sold
nor may offers to buy be accepted prior to the time the registration statement
becomes effective. These materials shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any state in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such state.
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Letter to SEC regarding Statements of KCPL
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May 6, 1996
BY HAND
Securities and Exchange Commission,
Division of Corporation Finance,
450 Fifth Street, N.W.,
Washington, D.C. 20549
Re: Western Resources, Inc. (File No. 1-707), originally
filed April 22, 1996
Ladies and Gentlemen:
I write on behalf of Western Resources, Inc. ("Western
Resources") to inform the Commission about what Western Resources believes
is a campaign of misinformation being waged by Kansas City Power & Light
Company ("KCPL") in its proxy solicitation in an effort to persuade its
shareholders to vote for the proposed merger with UtiliCorp United Inc.
(the "UtiliCorp Proposal"). This campaign of misinformation by KCPL,
assisted by UtiliCorp, has been triggered by the emergence of Western
Resources' proposed exchange offer for KCPL (the "Western Resources Offer")
and has been calculated to poison KCPL shareholders against the Western
Resources Offer even before the KCPL shareholders
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received Western Resources' definitive proxy materials and preliminary
prospectus (hereafter, the "Preliminary Prospectus") currently on file with
the Commission (Registration Statement filed April 22, 1996; File No. 333-
02711). These materials were just mailed over the weekend of May 4-5,
1996.
In Western Resources' view, as more fully documented herein,
KCPL's misinformation tactics include:
* Making statements that are either simply false or
otherwise omit materially necessary facts;
* Continually representing as "fact" matters that are, at
best, opinion, and, at worst, rank speculation;
* Continually focusing on customary language in the Western
Resources Preliminary Prospectus informing shareholders
about the uncertainties inherent in forward-looking
statements and implying that such customary language
conveys substantial doubt on Western Resources' part
about the statements; this is a particularly insidious
tactic considering that KCPL's shareholders had not yet
received the Preliminary Prospectus; and
* Highlighting potential obstacles to the consummation of
the Western Resources transaction without advising its
shareholders that the KCPL board can remove these
obstacles.
KCPL's campaign of misinformation began with an April 21, 1996
letter to shareholders from Drue Jennings, KCPL's Chairman of the Board,
President and Chief Executive
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officer, unfairly mischaracterizing the Western Resources Offer and urging
KCPL shareholders to vote for the UtiliCorp Proposal (the "April 21
letter"); it continued with an April 26, 1996 KCPL advertisement repeating
many of the misleading statements and misinformation contained in the April
21 letter (the "April 26 advertisement"); and then proceeded with an April
29, 1996 KCPL letter (the "April 29 letter") and advertisement (the "April
29 advertisement") containing more misstatements and misinformation. Also
on April 29, 1996, UtiliCorp published an advertisement entitled "Merger
Facts," repeating many of KCPL's misstatements and misinformation
("UtiliCorp Merger Facts"). (The various communications are attached
hereto as Exhibits A, B, C, E and F).
We quote below the statements made by KCPL and UtiliCorp, and
then explain why Western Resources feels each statement is materially false
and/or materially misleading.
1. KCPL's Misstatements and Misinformation About Western
Resources' Ability to Achieve Savings:
"Western's synergy claims are inflated. The value of Western's
Proposal is dependent upon Western's ability to achieve over $1
billion in savings. You should know that, less than a year ago,
Western estimated savings of less than half that amount. It is clear
to us that Western manipulated its proposal to create the illusion of
value." (April 21 letter) (Ex. A)
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"In a May 22, 1995 letter from Western's Chairman to KCPL's Chairman,
Western estimated it could only save $500 million over 10 years in a
merger with KCPL -- less than half of what it is saying now." (April
26 advertisement) (Ex. B)
"Western's proposal assumes $500 million of 'phantom' cost savings.
Western claims it can achieve $1 billion of cost savings from its
merger with your company. However, less than a year ago, Western's
same synergy experts arrived at savings of only $500 million. Is
Western inflating its savings estimate in an attempt to support its
stock price?" (April 29 letter) (Ex. C)
Western Resources' Response:
KCPL's allegations of "phantom" cost savings, "manipulat[ion]" and
"illusion" of value are a clear distortion of the facts. In the May
22, 1995 letter that forms the basis for this line of attack by KCPL,
Western Resources' Chairman John E. Hayes, Jr. informed KCPL's Mr.
Jennings that Western Resources' "preliminary estimate" was that
"savings achieved through the [proposed] combination [of KCPL and
Western Resources] will exceed $500M over the first ten years of
operation." (May 22, 1995 letter at 1) (Ex. D) (emphasis added).
Thus, KCPL's repeated proxy solicitation statements that Western
Resources' 1995 estimates of cost savings are "less than half" the
current estimates or constitute "savings of only $500 million" are
flatly wrong.
Furthermore, nowhere in its various statements does KCPL explain how
a merger with Western Resources (which is considerably larger than
either KCPL or UtiliCorp and has more contiguous and overlapping
territories with KCPL than does UtiliCorp) could generate less
savings than the $636 million projected in the UtiliCorp Proposal.
Moreover, as KCPL knows, the 1996 $1 billion cost savings estimate by
Western Resources is supported by a detailed analysis in the
Preliminary Prospectus developed by Western Resources' management
with the assistance of the Deloitte & Touche Consulting Group (see
pages 19-20 and 58 of the Preliminary Prospectus). (A description of
this analysis was also included in
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the Kansas Corporation Commission Report publicly filed by Western
Resources on April 15, 1996.)
In fact, the May 1995 Western Resources' preliminary estimate was
performed in less than a week and involved interviews with a limited
number of Western Resources officers. By contrast, the cost savings
review conducted this year by Western Resources, with the assistance
of Deloitte & Touche Consulting Group, and which is described in the
Preliminary Prospectus, has been far more detailed in scope, took
place over a 5-6 week period, and involved analyses of internal
financial information and interviews with persons in every functional
area, including most of Western Resources' officers.
Moreover, the purpose of the 1996 analysis was to determine what
level of cost savings could be achieved as a result of a merger
between KCPL and Western Resources. By contrast, the purpose of the
1995 analysis was simply to determine whether a minimum level of cost
savings was available sufficient to avoid any dilutive effect on
earnings of a combination between KCPL and Western Resources.
Notwithstanding an April 26, 1996 letter from Mr. Hayes advising Mr.
Jennings that the 1995 Western Resources' estimate was cursory and
preliminary compared to Western Resources' 1996 analysis, Mr.
Jennings went ahead and repeated the misleading statements about the
two analyses in his April 29 letter to KCPL shareholders without any
clarification of such material differences. This continued
comparison by KCPL of the two very different estimates to create the
inference that Western Resources has no basis for its present cost
savings projection is deliberately calculated to mislead KCPL
shareholders.
2. KCPL's and UtiliCorp's Misstatements and Misinformation
Concerning the Accretive Effect of the Western
Resources Offer on Western Resources' Shareholders:
"Are you willing to wait as long as two years hoping to get Western
shares knowing that the payoff is in the hands of Western's
shareholders who will have to
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approve a deal that appears to be dilutive to them?" (April 29
advertisement) (Ex. E)
"Western must receive approval from its own shareholders. Once they
understand that this deal could erode their investment in Western
stock, is [the Western Offer] realistic?" (April 29 letter) (Ex. C)
"Western shareholders, who we believe may find the deal extremely
dilutive to them, must approve any KCPL deal before it can close."
(UtiliCorp Merger Facts) (Ex. F)
Western Resources' Response:
Again taking advantage of KCPL's shareholders' lack of information
regarding the Western Resources Offer, KCPL and UtiliCorp materially
distort the effect of the Western Resources Offer on Western
Resources' earnings per share. In fact, Western Resources' unaudited
forecasted statement of income contained in the Preliminary
Prospectus forecasts that a merger with KCPL is accretive to Western
Resources' shareholders over the three-year period from 1998-2000
(assuming consummation of the merger by year-end 1997). (Preliminary
Prospectus at 56). The forecasts indicate potential dilution of
Western Resources' earnings per share only in 1998, the first year of
the merger (and the year that the costs associated with the merger
would have a one-time impact on earnings). However, the same
forecasts (see page 56 of the Preliminary Prospectus) demonstrate
meaningful Western Resources earnings accretion in 1999 and 2000.
Thus, contrary to KCPL's and UtiliCorp's implications, when voting on
the merger between KCPL and Western Resources, Western Resources
shareholders will be voting on a transaction that is projected to be
significantly accretive over the three year period following
consummation of the merger. (The Western Resources Offer will at all
times be accretive to KCPL shareholders.)
Tellingly, when the UtiliCorp Proposal was publicly announced, KCPL
touted an opinion by its investment banker Merrill Lynch & Co. that
the transaction with UtiliCorp was fair from a financial point of
view to
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KCPL shareholders. By contrast, although KCPL has publicly attacked the
Western Resources Offer as less attractive than the UtiliCorp Proposal, it
has not disclosed any analysis by it or its investment bankers comparing
the values provided by the two proposals or an opinion on the fairness of
the Western Resources Offer. If such analysis or opinion exists, KCPL
should disclose it.
KCPL's and UtiliCorp's statements concerning the potential dilutive
effect of the Western Resources Offer on Western Resources' earnings
are false and designed to mislead KCPL shareholders.
3. KCPL's Misstatements and Misinformation Concerning the
Prospect of Dividends to KCPL Shareholders:
"Western's promised dividend increases are questionable. If Western
can't achieve its forecast merger savings, keep most of them, and
avoid adverse regulatory treatment, we believe Western will not
maintain its dividend at the proposed level." (April 21 letter) (Ex.
A)
"In its official SEC filings Western admitted its dividend could be
significantly smaller than what it is promising publicly." (April 26
advertisement) (Ex. B)
Western Resources' Response:
The first statement has no basis in fact and the second is absolutely
false and misleading. Western Resources has never "admitted" in any
SEC filing that dividends could be "significantly smaller" after a
merger with KCPL. Instead, Western Resources has stated that the
increase in dividends to KCPL shareholders as a result of the Western
Resources Offer is a simple mathematical calculation based on the
merger exchange ratio and Western Resources' current dividend rate
and is not related in any way to any future proposed dividend
increase by Western Resources or to the level of future merger cost
savings. In addition, the forecasts in the Preliminary Prospectus
contain an assumed increase in dividends after the Western
Resources/KCPL combination and an analysis of the cost savings that
will result from a merger.
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Thus, KCPL's baseless and unfounded attacks on Western Resources'
dividend policy are a deliberate and calculated attempt to mislead
KCPL shareholders.
4. KCPL's Misstatements and Misinformation Concerning
Layoffs:
" Western's exaggerated claims go beyond the financial claims of its
merger proposal. In a thinly-veiled attempt to mollify community
leaders and KCPL employees, Western has promised that there would be
no layoffs in a KCPL/Western merger and that it would maintain three
separate corporate headquarters. These promises are incompatible
with Western's need to maximize cost savings." (April 21 letter)
(Ex. A)
"In official KCC filings Western admits 531 'merger related
reductions.' When Western merged with KGE in 1992, it said there
would be no layoffs. Yet Western's hometown paper The Wichita Eagle
reported 'Western Resources now employs nearly 2,000 fewer people
than KGE and KPL employed before their merger' in 1992." (April 26
advertisement) (Ex. B)
"Are you confident that there will be no layoffs in a hostile
takeover of KCPL when Western admits in its official filings to '531
merger related reductions'?" (April 29 advertisement) (Ex. E)
Western Resources' Response:
Western Resources unequivocally stated in its April 14, 1996 letter
to KCPL and in subsequent proxy solicitation materials and the
Preliminary Prospectus that its offer, if successful, will not result
in any layoffs of KCPL or Western Resources employees. Western
Resources has stated that any merger-related reductions will be
managed through a combination of "attrition, controlled hiring, and
work management programs," a formula that enabled Western Resources,
after its 1992 merger with Kansas Gas & Electric, Co. ("KGE"), to
integrate the KGE workforce without any layoffs. Western Resources
has clearly stated that any employee whose position is eliminated as
a result of the merger (currently projected by Western Resources as
531 positions) will be offered a new position with the
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company or in one of its or KCPL's growing unregulated subsidiaries.
KCPL's statement concerning the reduction of 2,000 employees
following the KGE/KPL merger is false. None of those 2,000 employees
was "laid off". Over 1,000 employees were transferred due to the
sale of Western Resources' Missouri natural gas properties in January
1994. KCPL is almost certainly aware of this sale because it was a
highly publicized and noteworthy occurrence in the utilities industry
that was widely reported in the press. The remainder of the
positions were reduced by employing a combination of attrition,
controlled hiring, retraining, placements in growing unregulated
subsidiaries, early retirements and better management programs (such
as activity standardization and technology substitution). This
information has been regularly reported in Western Resources' SEC
filings and elsewhere.
Thus, KCPL's assertion that Western Resources does plan layoffs --
obviously calculated to engender bad will towards Western Resources -
- is baseless and is intended to mislead its own shareholders.
5. KCPL's and UtiliCorp's Misstatements and Misinformation
Concerning Regulatory Approval:
"Are you at all confident that Western will receive all 'necessary or
desirable' governmental and regulatory approvals when it states, in
its own S-4 SEC filing, that there can be no assurances that such
approvals can be obtained?" (April 29 advertisement) (Ex. E)
"Are you aware that an exchange offer in the utility industry can't
close until all regulatory approvals are received which could take up
to two years?" (April 29 advertisement) (Ex. E)
"An exchange offer cannot close, and tendered shares cannot be
purchased, until all state and federal regulatory approvals have been
obtained. There currently are numerous deals awaiting FERC approval
and Western has yet to even file with FERC. Any proposed Western
KCPL combination could take as long as two years for approval."
(UtiliCorp Merger Facts) (Ex. F)
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Western Resources' Response:
KCPL deliberately and unfairly takes advantage of Western Resources'
full disclosure to KCPL shareholders by falsely portraying well-
accepted cautionary language that normally accompanies forecasts,
projections or forward-looking statements, as a lack of confidence on
Western Resources' part that regulatory approval will be obtained.
This is clearly an attempt to mislead KCPL shareholders.
KCPL and UtiliCorp omit to tell KCPL shareholders that the UtiliCorp
Proposal also requires more regulatory approvals than the Western
Resources Offer, and could also take up to two years to obtain. A
merger with Western Resources would require only two approvals by
state regulatory authorities and none in foreign countries, whereas
the UtiliCorp Proposal will require seven state regulatory approvals
and three foreign approvals. KCPL also omits to state that the KCPL
Joint Proxy Statement contains virtually identical cautionary
language regarding the UtiliCorp Proposal to that contained in the
Preliminary Prospectus: "[w]hile KCPL and UCU believe that they will
receive the regulatory approvals for the Merger, there can be no
assurance as to the timing of such approvals or the ability of such
parties to obtain such approvals on satisfactory terms or otherwise
..." (KCPL Joint Proxy Statement at page 20) (emphasis added)
Accordingly, KCPL's statements regarding regulatory approvals for a
proposed KCPL/Western Resources transaction are deliberately
calculated to mislead KCPL shareholders.
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6. KCPL's Misstatements and Misinformation Concerning
Western Resources' Ability to Retain 70% of Cost
Savings:
"In addition to inflating the potential amount of merger savings,
Western says it expects that regulatory authorities will allow it to
retain 70% of its estimated merger benefits. You should know that in
today's environment, regulators typically allow utilities to retain
only 50% or less of these savings. In fact, Western is under a
Kansas order that states 'sharing of savings will be on a 50/50
basis.'" (April 21 letter) (Ex. A)
"Western is under a Kansas Corporation Commission (KCC) order that
requires it to share savings 'on a 50/50 basis' with its ratepayers.
Even if Western Resources were free of this legal requirement, it
still couldn't deliver since regulators typically allow utilities to
retain only 50% or less of these savings. In its own SEC filings on
the UtiliCorp merger, KCPL's savings retention estimate is a
realistic 50%." (April 26 advertisement) (Ex. B)
"The market value of Western's shares would be heavily influenced by
Western's ability to achieve its inflated savings estimates and by
betting that regulators would allow it to retain a precedent-setting
70% of such savings." (April 26 advertisement) (Ex. B)
"Western's assumption that it will be able to keep 70 percent of cost
savings is fiction. In other utility mergers, regulators have
allowed companies to keep only 50 percent of cost savings. In fact,
Western itself is under an order from Kansas regulatory officials to
share savings on a '50/50' basis with ratepayers." (April 29 letter)
(Ex. C)
Western Resources' Response:
First, KCPL misrepresents the terms of the order entered by the
Kansas Corporations Commission ("KCC"), which was entered on November
15, 1991 in connection with Western Resources' merger with KGE (the
"Order"). The Order does not require Western Resources to share
savings on a "50/50 basis" with customers. Instead, the Order
permits Western Resources to retain savings,
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on an amortized basis, up to the level that equals the authorized premium
it paid for KGE; only savings over that level must be split 50/50 with
customers pursuant to the Order. The Order specifically states that the
"merger-related savings in excess of the annual amortization of the
[authorized premium] shall be shared between ratepayers and shareholders on
a 50/50 basis after taxes are paid beginning August 1995." (Order at 108,
para. 6) (emphasis added). KCPL's misrepresentation of the terms of the
Order is particularly egregious because it was a party to the proceedings
in which the Order was entered and therefore has actual knowledge of its
terms.
Second, KCPL's communications fail to disclose that only $225 million
of the estimated $636 million cost savings arising from the proposed
KCPL-UtiliCorp transaction will be passed on to consumers. This is
approximately 35% of the projected merger savings and therefore
approximately 65% of total projected savings from the UtiliCorp
Proposal would be retained by the merged entity. Thus, KCPL's
statement that its "savings retention estimate is a realistic 50%"
(April 26 advertisement) and its conclusory statement that
"regulators typically allow utilities only 50% or less of these
savings" are false and misleading.
Furthermore, KCPL fails to inform KCPL shareholders that in
affidavits publicly filed with the KCC, Richard C. "Pete" Loux and C.
Michael Lennan, both former chairmen of the KCC, have stated that a
transaction with Western Resources will create greater benefits for
customers and will create a financially stronger company than a
merged KCPL/UtiliCorp entity.
7. KCPL's Misstatements and Misinformation Concerning Potential
Regulatory Action:
"[L]ast week, Citizens' Utility Ratepayer Board (CURB) told Kansas
regulators that it would 'request more significant rate reductions'
than those included in Western's latest proposal. Such a decrease in
Western's rates would undermine the value of its stock and inhibit
Western's ability to maintain even its current dividend." (April 21
letter) (Ex. A)
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"Kansas regulators are about to hit Western with rate reductions that
will have a negative effect on Western's revenues and earnings and
will not be good news for its share value. While Western is trying
to limit this reduction to $8.7 million, intervenors such as the
Citizens' Utility Ratepayer Board have already said they will seek
substantially more." (April 29 letter) (Ex. C)
Western Resources' Response:
By characterizing potential regulatory action as a factual certainty,
KCPL is deliberately misleading its shareholders. The Kansas
Corporation Commission -- the only "Kansas regulators" that can
impose rate reductions -- has not imposed any such reductions, nor
has it announced any intention of doing so. In fact, no hearings
have yet been held by the KCC on Western Resources' future rates. To
state that the regulators are "about to" impose cuts greater than the
$8.7 million reduction voluntarily proposed by Western Resources is
pure speculation and conjecture.
Moreover, the consumer advocate group "CURB", like all advocacy
groups, regularly argues that utility rates should be cut. The
likelihood that such advocacy will be successful is, as KCPL well
knows, highly speculative. Most pertinently, CURB's views are not
binding and hardly indicate that rates are "about to" or will be cut.
Accordingly, KCPL's statements about the prospects of regulatory
action have no factual basis and are therefore deliberately
calculated to mislead KCPL shareholders.
8. KCPL's and UtiliCorp's Misstatements and Misinformation Concerning
the 90% Tender Condition:
"At least 90 percent of KCPL's outstanding shares must be tendered to
Western. Given the legitimate questions about the real value of
Western's offer, is this realistic?" (April 29 letter) (Ex. C)
"Why is Western conditioning its 'offer' on at least 90% of KCPL
shares being tendered which is unlikely to
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be achieved in any hostile situation?" (April 29 advertisement) (Ex. E)
"Western won't close unless they get 90% tendered, an extremely
difficult condition in any hostile exchange." (UtiliCorp Merger
Facts) (Ex. F)
Western Resources' Response:
Plainly, the likelihood of a successful 90% tender is a matter of
opinion. However, KCPL couches the potential unlikelihood of a 90%
tender as a factual statement, thereby misleading its shareholders.
The Commission has asked that Western Resources ensure that all
statements of "belief" and "opinion" in its proxy materials are
clearly characterized as such. Surely, the same standard should also
apply to KCPL.
Moreover, KCPL's statement assumes that the Western transaction will
still be unsolicited at the time the exchange offer is consummated.
This may not be the case -- especially if KCPL's shareholders reject
the UtiliCorp Proposal. In fact, in a declaration submitted by KCPL
to the Federal Energy Regulatory Commission ("FERC") in connection
with KCPL's 1990 hostile offer for KGE, KCPL affirmatively stated
that "substantially all acquisition transactions which start out as
unsolicited tender offers ultimately become negotiated
transactions."*
KCPL also does not now disclose to its shareholders that in
connection with its 1990 unsolicited offer for KGE, which was also
conditioned on receiving 90% of outstanding shares, its financial
advisors (who are advising UtiliCorp in the current transaction)
opined to the FERC in a KCPL submission that it was "entirely
possible that more than 90% of KG&E's outstanding common and
preferred shares will be tendered into KCPL's tender offer, even if
the parties have not entered into a negotiated transaction at the
time the tender offer is consummated." (Hedley Decl. para. 7)
Furthermore, in connection with that 1990 transaction,
* August 2, 1990 declaration of David Hedley, a managing
director of Donaldson, Lufkin & Jenrette Securities
Corporation (attached as Exhibit G) (at para. 5).
<PAGE>
<PAGE> 15
KCPL insisted that statements to the contrary were "misleading and
distorted the likelihood of a successful acquisition of KG&E by KCPL."
(Hedley Decl. para. 4).
Thus, KCPL has itself stated that a 90% tender condition in an
unsolicited offer is realistic and achievable and that substantially
all unsolicited transactions that succeed become negotiated
transactions prior to consummation. Its suggestion to the contrary
with respect to the Western Resources Offer is false and misleading.
9. KCPL's Misstatements and Misinformation Concerning the Tax-Exempt
Status of the Western Resources Offer:
"Are you certain that this transaction is tax-free (which the KCPL/
UtiliCorp merger would be) when Western admitted, in its S-4 SEC
filing, that the tax-exempt status of the transaction 'is not free
from doubt?'" (April 29 advertisement) (Ex. E)
"Western admits its exchange offer may be fully taxable to you at the
federal level. In that case, its $28 a share promise would be
history." (April 29 letter) (Ex. C)
Western Resources' Response:
KCPL again deliberately takes advantage of Western Resources' full
disclosure to KCPL shareholders by falsely portraying typical
cautionary language that normally accompanies forward-looking
statements as a lack of confidence in the tax free status of the
Western Resources' Offer.
Western Resources does not "admit" that the Western Resources Offer
may be "fully taxable". In fact, the Preliminary Prospectus states
that Western Resources' counsel will render an opinion that the
Western Resources Offer should be tax-free. This tax opinion is
based on the consummation of a back-end merger within a reasonable
time following the tender. Once the 90% tender condition and other
exchange offer conditions are satisfied and Western Resources
acquires KCPL shares in the Western Resources Offer, Western
Resources will be able to ensure that the back-end
<PAGE>
<PAGE> 16
merger is consummated. Furthermore, if the transaction between Western
Resources and KCPL becomes a negotiated transaction which, as KCPL has
previously admitted (Hedley Decl. para. 5), almost always occurs in
successful unsolicited offers, the KCPL board will be able to ensure the
tax-free status of the transaction. KCPL's statements that the Western
Resources Offer may be fully taxable are therefore unfair, misleading and
designed to confuse KCPL shareholders.
The cautionary language emphasized by KCPL simply alerts KCPL
shareholders that future events, while wholly expected, cannot be
assured and that the ultimate arbiter of the taxable status of the
transaction will be the Internal Revenue Service, not Western
Resources' counsel.
10. KCPL's and UtiliCorp's Misstatements and Misinformation
Concerning Board Approval for the Western Resources
Offer:
"Western's proposal must satisfy the Missouri Business Combination
Law, which requires your Board's approval. Given the KCPL board's
unanimous rejection of the Western proposal, is this realistic?"
(April 29 letter) (Ex. C)
"Are you certain that Missouri's anti-takeover statute, which among
other things requires KCPL's board approval, won't preclude the deal
from closing when KCPL's Board of Directors already has rejected
Western's offer?" (April 29 advertisement) (Ex. E)
"Western has set as its own condition that Missouri's Business
Combination statute not apply. This requires approval of KCPL's
Board of Directors, which has already rejected the offer."
(UtiliCorp Merger Facts) (Ex. F)
Western Resources' Response:
KCPL's board is attempting to coerce its shareholders to vote for the
UtiliCorp Proposal by implying that the KCPL board's rejection of the
April 14, 1996 proposal to negotiate a friendly merger means that it
will automatically continue to reject the Western Resources Offer
under any circumstances. This threat is hollow,
<PAGE>
<PAGE> 17
however, for such behavior would be a breach of the KCPL board's fiduciary
duties to its shareholders. Those duties require KCPL's board to consider
Western Resources' exchange offer when it is made in light of the
circumstances then existing -- including the possible circumstance that the
UtiliCorp Proposal will have been rejected by the KCPL shareholders.
Furthermore, KCPL's premature rejection of the Western Resources
Offer, runs afoul of Rule 14e-2(a) of the Securities and Exchange Act
of 1934 (the "1934 Act") and sec. 351.459.2 of Missouri's Business
Combination Statute, both of which require the KCPL board to consider
and respond to any exchange offer within ten business days of it
having been made. While the KCPL board may have rejected the
friendly merger proposal set forth in Western Resources' April 14,
1996 letter, it has not yet considered the Western Resources Offer
under Rule 14e-2 and under the Missouri Business Combination Statute
and KCPL's board cannot do so until after Western Resources'
Registration Statement on Form S-4 is declared effective and the
exchange offer is commenced.
KCPL's statements are also inaccurate in another respect. The board
of KCPL in place prior to the date on which Western Resources
purchases KCPL shares must approve the exchange offer in order for
the prohibitions of the Missouri Business Combination Statute to be
avoided; contrary to KCPL's suggestions, there can be no assurance
that today's KCPL board will be the board that votes on the exchange
offer. If shareholders vote against the UtiliCorp Proposal, and the
current KCPL board continues to resist the Western Resources Offer,
at next year's KCPL annual meeting the shareholders could replace the
current KCPL board with representatives more amenable to a
transaction with Western Resources (assuming the Western Resources
Offer remains outstanding).
Accordingly, KCPL's use of the Missouri Business Combination Statute
to mislead its shareholders and KCPL's deliberate portrayal of a KCPL
board as a static entity with fixed opposition to the Western
Resources Offer into the future is false and misleading.
<PAGE>
<PAGE> 18
11. KCPL's and UtiliCorp's Misstatements and Misinformation
Concerning the Conditional Nature of the Western
Resources Offer:
"Are you comfortable with Western having up to two years to amend its
offer, or terminate it completely when it may do so, at any time
during that period, at its sole discretion?" (April 29
advertisement) (Ex. E)
"It is unlikely Western's offer will ever be completed. The fact is,
there are a number of very significant hurdles Western would have to
overcome before it could exchange a single share of KCPL stock."
(April 29 letter) (Ex. C)
"'In their sole discretion,' Western is free to amend the terms of
the deal or terminate it completely at any time before closing, which
could take as long as two years. In contrast, the terms of the
merger with UtiliCorp are fixed following shareholder approval."
(UtiliCorp Merger Facts) (Ex. F)
Western Resources' Response:
As is the case with the UtiliCorp Proposal (see KCPL Joint Proxy
Statement at 69, 73), the Western Resources Offer is subject to a
number of conditions. Most of the conditions are the same in the two
proposals and the remainder can be satisfied by action of the KCPL
board. KCPL and UtiliCorp create the false impression that the
conditions make the Western Resources Offer somehow intangible or
uncertain. As the Commission is aware, however, conditions of the
nature contained in the Western Resources Offer are commonplace in
acquisition proposals and hardly make the Western Resources Offer
"illusory". If the conditions are satisfied, Western Resources must
complete the offer.
KCPL also fails to disclose that in its merger agreement with
UtiliCorp and KC United Corp., KCPL specifically reserves its rights
to make amendments before and after shareholder approval of the
UtiliCorp Proposal, except in certain respects pertaining to
shareholder rights. (See Joint Proxy Statement at 73 and A-47 (para.
9.4 of UtiliCorp merger agreement)).
<PAGE>
<PAGE> 19
KCPL's statements concerning the conditional nature of the Western
Resources Offer are therefore calculated to mislead KCPL
shareholders.
12. KCPL's Misstatements and Misinformation About the
Exchange Ratio and Western Resources' "Collar"
Provision:
"[Western's] proposal contains a 'collar,' a mechanism which limits
the risk to Western's shareholders of subsequent stock price
declines, placing it squarely on the shoulders of KCPL shareholders."
(April 26 advertisement) (Ex. B)
"Western's proposal contains a 'Collar,' Wall Street jargon for a
mechanism which places the risk of any decline in Western's stock
price squarely on your shoulders. The collar also makes it
impossible to figure out what the Western deal will be worth when --
and if -- it is ever completed." (April 29 letter) (Ex. C)
"In stark contrast to the Western Proposal, the share-for-share
exchange in the merger of KCPL and UtiliCorp is fixed, regardless of
fluctuations in KCPL's or UtiliCorp's stock price. You will get full
benefit of any price appreciation that occurs between now and
consummation of the KCPL and UtiliCorp Merger." (April 29 letter)
(Ex. C)
Western Resources' Response:
By characterizing Western Resources' "collar" as placing the risk of
a decline in Western Resources' stock price on the KCPL shareholders,
KCPL suggests that this risk is peculiar to the Western Resources
transaction. In fact, a greater risk of declining stock price exists
with respect to the UtiliCorp Proposal because declines in stock
price in connection with that transaction will also be borne by the
KCPL shareholders, and in the case of the UtiliCorp Proposal the
magnitude of that decline to KCPL shareholders will remain totally
unchecked. By contrast, the Western Resources "collar" provides
assurance to KCPL shareholders that they will receive $28.00 worth of
Western Resources stock as long as the price of Western Resources
stock ranges between $28.43 and $33.61.
<PAGE>
<PAGE> 20
Moreover, KCPL omits to mention the upside potential of the "collar".
If the price of Western Resources shares increases to above $33.61,
the Western Resources Exchange Ratio does not change and KCPL
shareholders will reap the benefits of that price increase. KCPL's
description of the "collar" to merely highlight its purported
downside, and a description of the UtiliCorp Proposal as only
highlighting the potential upside, is thus selective and misleading.
13. KCPL's Misstatements and Misinformation Concerning
Western Resources' Intentions and Motives:
"Clearly, Western Resources, Inc.'s hostile bid is not designed to
create a company, it's to break up what it sees as a formidable, new
competitor[.]" (April 29 advertisement) (Ex. E)
Western Resources' Response:
This unqualified statement is patently and materially false because
KCPL knows (and has publicly disclosed) that Western Resources'
interest in KCPL goes back well before the UtiliCorp Proposal.
Western Resources has repeatedly expressed a desire to KCPL over the
past two years for a combination between the two companies, but KCPL
has refused to negotiate.
Given the extensive and material inaccuracies, misstatements
and omissions outlined above, Western Resources believes that it is
essential that immediate action be taken by the Commission to remedy the
effects of KCPL's misinformation campaign in the ongoing proxy solicitation
with respect to the May 22, 1996 shareholders' meeting. Among other
things, Western Resources believes that KCPL should immediately disseminate
corrective disclosures to KCPL shareholders, and be instructed to cease and
desist from continuing to make materially false and
<PAGE>
<PAGE> 21
misleading statements to such shareholders. In light of the material
misstatements and omissions highlighted above, Western Resources also
believes that there is a significant risk that many of KCPL's shareholders
have already voted on the UtiliCorp Proposal based on inaccurate,
incomplete and materially misleading solicitation materials from KCPL.
Accordingly, the Commission should consider requiring KCPL to resolicit new
proxies in lieu of counting any that were executed prior to receipt by KCPL
shareholders of such corrective disclosure.
An order requiring corrective measures such as those suggested
here will further the policies behind the 1934 Act and, specifically,
Section 14(a) and Rule 14a-9 promulgated thereunder. As the Commission has
stated in SEC Rel. No. 33-31326 (Oct. 16, 1992) "[u]nderlying the adoption
of Section 14(a) of the Exchange Act was a Congressional concern that the
solicitation of proxy voting authority be conducted on a fair, honest and
informed basis. Therefore, Congress granted the Commission the broad
'power to control the conditions under which proxies may be solicited,' and
to promote 'fair corporate suffrage.' A necessary element of the
Commission's mandate was 'to prevent management or others from obtaining
authorization for corporate action by means of deceptive or inadequate
disclosure in proxy
<PAGE>
<PAGE> 22
solicitations.' See SEC Rel. 33-31326, 1992 SEC LEXIS 2470 at *7 (quoting
J.I. Case v. Borak, 377 U.S. 426, 431 (1964) and citing H.R. Rep. No. 1383,
73d Cong., 2d Sess. 13 (1934)).
Western Resources urges that the Commission exercise the
authority clearly granted by Congress to protect KCPL shareholders' right
to exercise their voting authority on a "fair, honest and informed basis."
By requiring the resolicitation of proxies the Commission would ensure that
KCPL shareholders are given an opportunity to vote on the UtiliCorp
Proposal based upon a true and accurate record.
I look forward to hearing from you. My direct dial number is
(212) 558-3653.
Very truly yours,
/s/Neil T. Anderson
Neil T. Anderson
(Enclosures)
<PAGE>
<PAGE> 1 Exhibit A
Take a Close Look:
Western's Promises Don't Add Up
The KCPL/UtiliCorp Merger is the Only Choice
April 21, 1996
Dear Shareholder:
In a last-minute attempt to derail the formation of a
formidable competitor, Western Resources, Inc. has submitted an ill-
conceived proposal to merge with Kansas City Power & Light Company in an
exchange of each share of your KCPL stock for a fraction of a share of
Western common stock. After careful deliberation, including consultation
with your Company's independent financial, legal and regulatory experts,
your Board has unanimously concluded that Western's proposal is not in your
best interests.
Accordingly, the Board has determined not to pursue a merger
with Western, reaffirming its commitment to the strategic merger of KCPL
with UtiliCorp United Inc. The Board strongly urges you to approve the
UtiliCorp merger by signing, dating and mailing the enclosed WHITE proxy
card today.
The proposed KCPL/UtiliCorp merger represents the culmination
of years of work, planning and pursuing a long-term business strategy to
enhance the growth of the Company and the value of your shares. The merger
agreement with UtiliCorp was reached only after your Board considered a
number of opportunities and was satisfied that a KCPL/UtiliCorp combination
was the best way to build value for you by enhancing near and long-term
business prospects for the Company.
In contrast to your Company's proposed merger with UtiliCorp,
the Western proposal is the latest in a series of transaction-driven ideas,
devoid of a long-term strategic rationale, from a management team that
boasts about doing "about a deal a month for the past year."
Your Board has determined that Western's proposal is premised
on a series of fundamentally flawed assumptions and estimates. Western
would have you believe that it is offering $28 in value per KCPL share
along with a substantially increased dividend. Take a closer look.
- Western's synergy claims are inflated. The value of Western's
proposal is dependent upon Western's ability to achieve over $1
billion in savings.
<PAGE>
<PAGE> 2
You should know that, less than a year ago, Western estimated
savings of less than half that amount. It is clear to us that
Western manipulated its proposal to create the illusion of value.
- Western's merger assumptions are unrealistic. In addition to
inflating the potential amount of merger savings, Western says
it expects that regulatory authorities will allow it to retain
70% of its estimated merger benefits. You should know that in
today's environment, regulators typically allow utilities to
retain only 50% or less of these savings. In fact, Western is
under a Kansas order that states "sharing of savings will be on
a 50/50 basis."
- Western's promised dividend increases are questionable. If
Western can't achieve its forecast merger savings, keep most of
them, and avoid adverse regulatory treatment, we believe
Western will not maintain its dividend at the proposed level.
In fact, just last week Standard & Poor's, the national credit
rating agency, put Western on its CreditWatch list for possible
downgrade, nothing that the company is "a weak Single-A-minus
utility with an average business position." Also last week,
Citizens' Utility Ratepayer Board (CURB) told Kansas regulators
that it would "request more significant rate reductions" than
those included in Western's latest proposal. Such a decrease
in Western's rates would undermine the value of its stock and
inhibit Western's ability to maintain even its current
dividend.
- Western's stock value in any merger with KCPL is speculative.
Western would have you believe that its proposal represents a
current market value of $28 per KCPL share. However, the
market value of the shares you would receive pursuant to the
Western proposal would be heavily influenced by Western's
ability to achieve its inflated estimates of savings and by its
optimistic assumption that regulators would allow it to retain
a precedent-setting 70% of such savings. The value of
Western's shares may also be affected adversely by cuts in
Western's utility rates, which are currently under review.
<PAGE>
<PAGE> 3
- Any KCPL/Western merger perpetuates the management challenge of
concentration of business risk in one asset-- Wolf Creek. In
contrast, the proposed merger with UtiliCorp would reduce this
risk by half and contribute a diversified portfolio that would
allow numerous avenues for future growth.
- Western's exaggerated claims go beyond the financial claims of
its merger proposal. In a thinly-veiled attempt to mollify
community leaders and KCPL employees, Western has promised that
there would be no layoffs in a KCPL/Western merger and that it
would maintain three separate corporate headquarters. These
promises are incompatible with Western's need to maximize cost
savings.
THE KCPL/UTILICORP MERGER IS THE ONLY CHOICE
Beyond all the questions raised about the specifics of
Western's proposal, there is a strategic issue here that is of great
concern to your Board. Put simply, it is the stark contrast between
Western's vision of the future of the utility industry and the vision
embodied in our proposal to merge with UtiliCorp. Western's proposal is
rooted in a bygone era that fails to recognize the fundamental changes
taking place in our industry, heavily weighted as it is on the side of cost
synergies, critical mass and concentration of assets and markets. Growth
and the need to meet the demands of a rapidly changing marketplace are
neglected in their proposal.
Our proposal to merge with UtiliCorp has very tangible short-
term benefits in the form of real, substantive and achievable cost savings.
We have documented more than $600 million in cost synergies that will be
realized over the next ten years. However, the cornerstone of our proposal
is the ability to achieve sustainable, long-term growth in shareholder
value. As a combined company, we will be able to:
- Compete effectively in national and global markets;
- Have greater access to potential new customers and new markets;
- Use our size and stability to achieve enhanced access to
capital markets;
<PAGE>
<PAGE> 4
- Introduce a new array of energy products and services;
- Reduce our cost structure through operational and purchasing
efficiencies that will make us an even more formidable cost
competitor;
- Provide a demonstrated track record in energy related non-
regulated businesses.
For all these reasons -- and in consideration of the risks of
Western Resources' unsolicited proposal -- your Board strongly advises you
to vote in favor of our combination with UtiliCorp United.
Sincerely,
Drue Jennings
Chairman of the Board,
President and Chief Executive
Officer
To do so, just sign, date and return the accompanying WHITE card,
using the enclosed postage-prepaid envelope, indicating your support of the
Company's Board and management. Only your latest proxy card will be
counted. If you have any questions or need assistance in completing the
enclosed WHITE card, please call our proxy solicitor, D.F. King & Co.,
Inc., toll free, at 1-800-714-3312.
<PAGE>
<PAGE> 1
Exhibit B
Don't Gamble on Empty Promises
Western's Proposal Doesn't Add Up
Western Resources is launching a hostile attack in a last-minute attempt to
derail the formation of a formidable competitor -- the new KCPL/UtiliCorp
company. KCPL believes Western is trying to manipulate KCPL shareholders
and our community into believing its unrealistic assertions. Don't believe
the hype.
Western's savings claims are inflated.
WESTERN SAYS: A Western/KCPL merger will result in savings of more than
$1 billion.
THE TRUTH IS: Western manipulated its date to create the illusion of
value. In a May 22, 1995 letter from Western's Chairman
to KCPL's Chairman, Western estimated it could only save
$500 million over 10 years in a merger with KCPL -- less
than half of what it is saying now.
Western's merger assumptions are unrealistic.
WESTERN SAYS: Regulatory authorities will allow Western to retain 70%
of its estimated merger benefits.
THE TRUTH IS: Western is under a Kansas Corporation Com- mission (KCC)
order that requires it to share savings "on a 50/50
basis" with its ratepayers. Even if Western were free of
this legal requirement, it still couldn't deliver since
regulators typically allow utilities to retain only 50%
or less of these savings. In its own SEC filings on the
UtiliCorp merger, KCPL's savings retention estimate is a
realistic 50%.
Western's promised dividend increases are questionable.
WESTERN SAYS: The dividend will be substantially increased.
THE TRUTH IS: In its official SEC filings Western admitted its dividend
could be significantly smaller than what it is promising
publicly. Since Western can't achieve its forecast
merger savings, keep most of them, and avoid adverse
regulatory treatment, KCPL believes that Western cannot
maintain its dividend at the
<PAGE>
<PAGE> 2
proposed level. In early April, Standard & Poor's put Western on its
CreditWatch list for possible downgrade and Citizens' Utility Ratepayer
Board told Kansas regulators that it would "request more significant rate
reductions" than those included in Western's latest proposal. Any decrease
in Western's rates or increase in the cost of capital caused by a S&P
downgrade would undermine the value of its stock and inhibit Western's
ability to maintain even its current dividend.
Western's stock value in any merger with KCPL is speculative.
WESTERN SAYS: Their proposal represents a current market value of $28
per KCPL share.
THE TRUTH IS: The market value of Western's shares would be heavily
influenced by Western's ability to achieve its inflated
savings estimates and by betting that regulators would
allow it to retain a precedent-setting 70% of such
savings. The value of Western's shares may also be
affected adversely by cuts in Western's utility rates,
which are currently under review. Western has
demonstrated concerns about a decline in its stock price.
Its proposal contains a "collar," a mechanism which
limits the risk to Western's shareholders of subsequent
stock price declines, placing it squarely on the
shoulders of KCPL shareholders. You should know that,
based upon April 23 closing prices, if the market price
of Western's common stock declines by just 5.3%, the
value of its proposal falls below $28 per KCPL share.
Any further decline in Western's stock price will result
in even greater erosion of value.
Western's promise of "no layoffs" doesn't square with the
truth.
WESTERN SAYS: There would be no layoffs in a KCPL/Western merger.
THE TRUTH IS: In official KCC filings Western admits 531 "merger
related reductions." When Western merged with KGE in
1992, it said there would
<PAGE>
<PAGE> 3
be no layoffs. Yet Western's hometown paper, the Wichita Eagle reported
"Western Resources now employ nearly 2,000 fewer people than KGE and KPL
employed before their merger" in 1992.
Don't Gamble on Western's Empty Promises. VOTE YES to The
KCPL/UtiliCorp Merger on the WHITE Proxy Card
If you have any questions or need assistance in completing the WHITE proxy
card, please call our proxy solicitor, D.F. King & Co., Inc., toll free, at
1-800-714-3312.
<PAGE>
<PAGE> 1
Exhibit C
April 29, 1996
Dear Shareholder:
In its continuing attempt to block the formation of a strong and
formidable competitor, Western Resources is now attempting to solicit
proxies against the merger of Kansas City Power & Light Company with
UtiliCorp United Inc. Western's disruptive proxy contest, coupled with its
highly conditional exchange offer, is driven solely by its own agenda, at
your expense.
IN CONTRAST, THE PROPOSED MERGER OF KCPL AND UTILICORP IS A STRATEGIC
COMBINATION DESIGNED TO BUILD SUSTAINABLE VALUE FOR YOU BY ENHANCING GROWTH
IN REVENUE AND INCOME IN A RAPIDLY CHANGING COMPETITIVE MARKETPLACE. YOU
ARE STRONGLY URGED TO VOTE FOR OUR MERGER WITH UTILICORP BY SIGNING, DATING
AND MAILING THE ENCLOSED WHITE PROXY TODAY.
In seeking to distract your attention from the benefits of the
KCPL/UtiliCorp merger, Western wants you to believe that it is making a
superior financial offer.
DON'T BE FOOLED
WESTERN IS NOT GUARANTEEING YOU $28 PER KCPL SHARE
Western proposes to exchange each of your KCPL shares for a
fractional share of its own common stock. They're telling you that the
value of the transaction is $28 a share -- but that figure is speculative,
based on a number of flawed assumptions and "strings" that Western has tied
to is proposal.
Consider the following:
- WESTERN'S PROPOSAL CONTAINS A "COLLAR," WALL STREET JARGON FOR
A MECHANISM WHICH PLACES THE RISK OF ANY DECLINE IN WESTERN'S
STOCK PRICE SQUARELY ON YOUR SHOULDERS. The collar also makes
it impossible to figure out what the Western deal will be worth
when -- and if -- it is ever completed.
- WESTERN ADMITS ITS EXCHANGE OFFER MAY BE FULLY TAXABLE TO YOU
AT THE FEDERAL LEVEL. In that case, its $28 a share promise
would be history.
- KANSAS REGULATORS ARE ABOUT TO HIT WESTERN WITH RATE REDUCTIONS
THAT WILL HAVE A NEGATIVE EFFECT ON WESTERN'S REVENUES AND
EARNINGS AND WILL NOT BE GOOD NEWS FOR ITS SHARE VALUE. While
Western is
<PAGE>
<PAGE> 2
trying to limit this reduction to $8.7 million, intervenors such as the
Citizens' Utility Ratepayer Board have already said they will seek
substantially more. Western is trying to delay any further action on rate
reductions until AFTER you vote on the KCPL/UtiliCorp merger.
- WESTERN'S PROPOSAL ASSUMES $500 MILLION OF "PHANTOM" COST
SAVINGS. Western claims it can achieve $1 billion of cost
savings from its merger with your company. However, less than
a year ago, Western's same synergy experts arrived at savings
at only $500 million. Is Western inflating its savings
estimate in an attempt to support its stock price?
- WESTERN'S ASSUMPTION THAT IT WILL BE ABLE TO KEEP 70 PERCENT OF
COST SAVINGS IS FICTION. In other utility mergers, regulators
have allowed companies to keep only 50 percent of cost savings.
In fact, Western itself is under an order from Kansas
regulatory officials to share savings on a "50/50" basis with
ratepayers.
IN STARK CONTRAST TO THE WESTERN PROPOSAL, THE SHARE-FOR-SHARE
EXCHANGE IN THE MERGER OF KCPL AND UTILICORP IS FIXED, REGARDLESS OF
FLUCTUATIONS IN KCPL'S OR UTILICORP'S STOCK PRICE. You will get full
benefit of any price appreciation that occurs between now and consummation
of the KCPL and UtiliCorp merger. Plus, our proposed combination doesn't
depend on inflated cost savings estimates or overly optimistic assumptions
about sharing of these cost savings.
WESTERN'S DIVIDEND MAY BE SUBSTANTIALLY LESS THAN PROMISED
Western's promise of a so-called 23% dividend increase is highly
questionable. Take a closer look:
- WESTERN'S ABILITY TO MAINTAIN ITS CURRENT DIVIDEND WILL BE
THREATENED IF WESTERN CAN'T ACHIEVE ITS FORECAST MERGER SAVINGS
AND KEEP MOST OF THEM. Remember, Western's proposal is based
on cost savings of more than twice Western's own estimates less
than a year ago. It also assumes that regulators will allow it
to keep a far greater percentage of these savings than is
realistic.
- WESTERN'S DIVIDEND WILL BE FURTHER THREATENED BY ADVERSE
REGULATORY TREATMENT. Remember, Western is using its proposal
as a delaying tactic to
<PAGE>
<PAGE> 3
avoid what may be inevitable -- cuts in electric rates that will further
reduce revenues and earnings.
WESTERN CANNOT SUPPORT THE ALLEGED VALUE OF ITS MERGER PROPOSAL
WITHOUT GROSSLY INFLATED ESTIMATES AND UNREALISTIC MERGER ASSUMPTIONS.
Western is betting that it can fool you with a highly conditional promise
of Western common stock with dubious value and a dividend that may not be
sustainable. Western is hoping that its flawed assumptions and empty
promises will get you to give up the tangible benefits and dividend safety
of a KCPL/UtiliCorp merger.
IT IS UNLIKELY WESTERN'S OFFER WILL EVER BY COMPLETED
The fact is, there are a number of very significant hurdles Western
would have to overcome before it could exchange a single share of KCPL
stock. Here are just three of many:
1. AT LEAST 90 PERCENT OF KCPL'S OUTSTANDING SHARES MUST BE
TENDERED TO WESTERN. Given the legitimate questions about the real
value of Western's offer, is this realistic?
2. WESTERN MUST RECEIVE APPROVAL FROM ITS OWN SHAREHOLDERS. Once
they understand that this deal could erode their investment in
Western stock, is this realistic?
3. WESTERN'S PROPOSAL MUST SATISFY THE MISSOURI BUSINESS
COMBINATION LAW, WHICH REQUIRES YOUR BOARD'S APPROVAL. Given the
KCPL board's unanimous rejection of the Western proposal, is this
realistic?
REMEMBER, WESTERN HAS NO FIDUCIARY OBLIGATIONS TO YOU. In fact,
Western is free to pursue its own personal and selfish agenda by any means
available to it. Your board of directors and management believe you
deserve better, which is what you will get through a strategic merger of
equals with UtiliCorp.
THE ELECTRIC UTILITY INDUSTRY IS FACING INTENSE COMPETITION IN A
DEREGULATED MARKET. Prudently managed, forward-looking utilities must
adapt to this fundamental change by developing effective long-term revenue
and income growth strategies. The combined KCPL and UtiliCorp will be a
growth company that can compete effectively in national and global markets
with a new array of energy products and
<PAGE>
<PAGE> 4
services. The new company will be uniquely positioned to meet the
challenges of a deregulated marketplace for power.
To us, and to your board, the choice is clear: KCPL/Utilicorp.
YOUR VOTE IS IMPORTANT
SINCE THE KCPL/UTILICORP MERGER REQUIRES THE AFFIRMATIVE VOTE OF TWO-
THIRDS OF KCPL'S OUTSTANDING SHARES, THE VOTE OF EVERY SHAREHOLDER IS
EXTREMELY SIGNIFICANT. A FAILURE TO VOTE IS THE SAME AS A VOTE AGAINST THE
KCPL/UTILICORP MERGER. IN YOUR OWN BEST INTEREST, YOU ARE EARNESTLY
REQUESTED TO VOTE FOR ADOPTION OF THIS MERGER BY SIGNING, DATING AND
RETURNING THE ENCLOSED WHITE PROXY CARD TODAY.
THANK YOU.
Sincerely,
Drue Jennings
Chairman of the
Board, President and
Chief Executive
Officer
FAILURE TO APPROVE THE KCPL/UTILICORP MERGER WILL LEAVE YOU WITH NOTHING
BUT EMPTY PROMISES.
IMPORTANT
Please make sure your latest dated proxy is a WHITE card voting FOR the
KCPL/UtiliCorp merger (proposal #1). FAILURE TO RETURN A PROXY WILL HAVE
THE SAME AFFECT AS A VOTE AGAINST THE MERGER. If you have any questions or
need assistance in voting your KCPL shares, please call D.F. King & Co.,
Inc. at (800) 714-3312 (toll-free).
<PAGE>
<PAGE> 1
Exhibit D
May 22, 1995
Mr. A. Drue Jennings
Chairman, President & CEO
Kansas City Power & Light Company
1201 Walnut Street
Kansas City, MO 64141-9679
By Hand Delivery
Dear Drue,
Since we last discussed the potential combination of Kansas
City Power and Light and Western Resources, I now have reason to believe
that you are seriously discussing a merger with another utility. In that
light, I want to make sure the record is clear with respect to our offer to
you.
We remain convinced that a merger of KCPL with any other
company could not achieve the same level of customer or shareholder value
that can be achieved through a merger with us. Further, Drue, we remain
convinced that standing alone, neither of us can achieve the same level of
value for our customers and shareholders as can be achieved through a
merger of our two companies.
We have again reviewed the many advantages of a merger of our
companies for customers, shareholders, and employees. In regard to only
one of those many mutual benefits, our preliminary estimate is that savings
achieved through the combination will exceed $500M over the first ten years
of operation. I propose that those savings be shared equitably among our
respective customers and shareholders. I would suggest that we sit down
and work out together a sharing plan that makes the most sense to all
parties. (As I have noted before, this savings benefit is over and above
what we can achieve from our respective stand alone business plans, which
can be maintained.)
Drue, I hope you would agree that over the past three years,
you and I have worked quite well together as equals in guiding Wolf Creek
to ever improving performance; and I, for one, have enjoyed our working
relationship as I hope you have. I can see absolutely no reason why that
same approach we have enjoyed in regard to our Wolf Creek interests can not
be applied to a true merger of equals of our entire companies.
<PAGE>
<PAGE> 2
In regard to corporate governance, I suggest for your
consideration a combined board of 24 directors, including all nine of your
present board members plus three new members that your current board would
select, and all 12 of our current board members, which may seem large, but
which I know from experience is manageable. Further, I would hope to
negotiate a common stock exchange ratio that would provide your
shareholders with dividend equivalency. we would be agreeable to a new
name for the combined company and a mutual determination of headquarters
locations.
As I have previously suggested, at the beginning of the life of
the new company, I would serve as chairman and CEO and you would serve as
vice chairman, president, and COO of the parent company. I would further
suggest that we split the officer positions equally among our officer
corps.
Of course, everything that I have outlined is subject to
negotiation and designed to arrive at a true merger of equals. If on the
other hand, your board would prefer to structure the transaction as a
standard acquisition, we are prepared to address the premium we would be
willing to pay to your shareholders.
Drue, on a very personal note, as I reflect upon our
discussions over the past two years or so, it seems to have fallen to me to
make proposals and to outline possible plans for a combination. We really
have not heard from you regarding your interests, requirements, or
suggestions. If they were made and I did not understand them, I offer my
apologies; because, I know that the only true merger of equals is a merger
which involves a partnership of ideas as well as control. Our strong
preference is to reach a negotiated transaction with you. It is not my
preference to proceed unilaterally with a public proposal unless that
becomes our only option.
If you will allow me to close with a recollection of a
conversation you and I had in February regarding a possible combination, I
recall you stated to me that you don't think anyone can foreclose my ideas
on the matter - you just have a different opinion on how best to proceed.
In light of your thoughts, if I have remembered them correctly, and what we
know can be the outstanding benefits for customers and shareholders, I urge
you to share with me your opinion on how we may best proceed together. I
would like to call you by Wednesday to schedule a meeting with you and your
team to begin negotiations.
Sincerely,
/s/ John
<PAGE>
<PAGE> 1
Exhibit E
[KCPL Logo]
XXXXX
[Advertisement ran April 29, 1996]
IT'S ABOUT CREDIBILITY
To Our Shareholders:
OUR FRIENDLY MERGER CREATES A STRONG, NEW COMPANY
... WESTERN IS TRYING TO BREAK IT UP
Clearly, Western Resources, Inc.'s hostile bid is not designed to create a
company, it's to break up what it sees as a formidable, new competitor --
the company created through the friendly merger of equals between Kansas
City Power & Light Company and UtiliCorp United Inc.
Think about it. To pay fair and equitable dividends -- and to deliver
enduring value to shareholders over the long term -- much more is needed
than simply an illusory offer built upon faulty assumptions. And Western
Resources' "offer" has so many conditions and hurdles attached to it that
shareholders have to wonder just how real it really is.
Ask Why is Western conditioning ... which is unlikely to
yourself: its "offer" on at least 90% be achieved in any
of KCPL shares being hostile situation?
tendered...
Ask Are you willing to wait as ... who will have to
yourself: long as two years hoping to approve a deal that
get Western shares knowing appears to be dilutive
that the payoff is in the to them?
hands of Western's
shareholders ...
Ask Are you at all confident that ... when it states, in
yourself: Western will receive all its own S-4 SEC filing,
"necessary or desirable" that there can be no
governmental and regulatory assurances that such
approvals ... approvals can be
obtained?
<PAGE>
<PAGE> 2
Ask Are you certain that this ... when Western
yourself: transaction is tax-free admitted, in its S-4 SEC
(which the KCPL/UtiliCorp filing, that the tax-
merger would be)... exempt status of the
transaction "is not free
from doubt"?
Ask Are you certain that ... when KCPL's Board of
yourself: Missouri's anti-takeover Directors already has
statute, which among other rejected Western's
things requires KCPL's board offer?
approval, won't preclude the
deal from closing ...
Ask Are you aware that an ... which could take up
yourself: exchange offer in the utility to two years?
industry can't close until
all regulatory approvals are
received ...
Ask Are you comfortable with ... when it may do so,
yourself: Western having up to two at any time during that
years to amend its offer, or period, at its sole
terminate it completely ... discretion?
Ask Are you confident that there ... when Western admits
yourself: will be no layoffs in a in its official filings
hostile takeover of KCPL ... to 531 "merger related
reductions"?
Your conclusion should be obvious.
Western's hostile bid is not credible,
it's not achievable,
and it's not strategic.
And your choice also should be obvious. Vote for the KCPL/UtiliCorp
merger. Don't let this transaction go away. Please sign, date and mail
the WHITE proxy card today.
If you have any questions or need assistance in completing the WHITE proxy
card, KCPL shareholders should call KCPL's proxy solicitor, D.F. King &
Co., Inc., toll free, at 1-800-714-3312.
April 29, 1996 [KCPL LOGO]
<PAGE>
<PAGE> 1
Exhibit F
[UtiliCorp Logo]
MERGER FACTS
April 29, 1996
Western Resources is making a hostile bid for KCPL based on illusory terms
built on faulty assumptions.
Look at their own conditions...
90 Percent Minimum Tender Western won't close unless they
get 90% tendered, an extremely
difficult condition in any hostile
exchange.
Free to Amend or Terminate "In their sole discretion,"
Western is free to amend the terms
of the deal or terminate it
completely at any time before
closing, which could take as long
as two years. In contrast, the
terms of the merger with UtiliCorp
are fixed following shareholder
approval.
Western Shareholder Approval Western shareholders, who we
believe may find the deal
extremely dilutive to them, must
approve any KCPL deal before it
can close.
...Which Are Further Compounded by Regulatory Hurdles
Missouri Anti-Takeover Statutes Western has set as its own
condition that Missouri's Business
Combination statute not apply.
This requires approval of KCPL's
Board of Directors, which has
already rejected the offer.
The Missouri Control Share
Acquisition Statute and Western's
condition require KCPL shareholder
approval.
<PAGE>
<PAGE> 2
Antitrust The KCPL/Utilicorp merger is pro-
competition. Western's hostile
offer for KCPL would eliminate a
competitor, and could raise
serious antitrust and regulatory
concerns.
Two Year Open Tender An exchange offer cannot close,
and tendered shares cannot be
purchased, until all state and
federal regulatory approvals have
been obtained. There currently
are numerous deals awaiting FERC
approval and Western has yet to
even file with FERC. Any proposed
Western/KCPL combination could
take as long as two years for
approval.
In examining these hurdles and conditions, it is clear to us that
Western's hostile bid is NEITHER CREDIBLE NOR ACHIEVABLE.
<PAGE>
<PAGE> 1
Exhibit G
UNITED STATES OF AMERICA
BEFORE THE
FEDERAL ENERGY REGULATORY COMMISSION
Kansas City Power & Light )
Company and Kansas Gas and ) Docket No. EC-90-16-000
Electric Company )
DECLARATION OF DAVID V.H. HEDLEY
DAVID V.H. HEDLEY, for his declaration pursuant to 28 U.S.C.
sec. 1746, states as follows:
1. I am a managing director of Donaldson Lufkin & Jenrette
Securities Corporation ("DLJ"), which is the financial advisor to, and
Dealer Manager for, Kansas City Power & Light Company ("KCPL") in its
tender offer for all outstanding common and preferred shares of Kansas Gas
and Electric Company ("KG&E").
2. DLJ is a full-service investment bank with significant
merger and acquisition experience, and has assisted both acquiror and
subject companies in unsolicited and negotiated acquisition transactions.
We have acted as financial advisor to numerous acquiror and subject
companies in tender or exchange offers, including unsolicited offers.
3. I have reviewed the statement by Georgeson & Company Inc.
("Georgeson"), KG&E's proxy solicitation firm, which is attached to, and
cited on pages 10-11 of, KG&E's motions in opposition to KCPL's application
to the Federal Energy Regulatory Commission.
<PAGE>
<PAGE> 2
4. Based upon my experience and the experience of DLJ, these
statements and conclusions are misleading and distort the likelihood of a
successful acquisition of KG&E by KCPL.
5. Georgeson's statements ignore the fact that substantially
all acquisition transactions which start out as unsolicited tender offers
ultimately become negotiated transactions. Indeed, to our knowledge, there
have only been two consummated tender offers which remained totally
unsolicited and were never negotiated -- Danaher Corporation's offer for
Chicago Pneumatic in 1986 and H.K. Porter Company, Inc.'s offer for
Missouri Portland Cement Company in 1975. Since most unsolicited tender
offers ultimately become negotiated transactions, we believe that
Georgeson's analysis is flawed and does not provide an accurate gauge of
the likelihood of success of KCPL's tender offer for KG&E's common and
preferred shares.
6. Georgeson claims that it is unaware of any unsolicited
tender offer which has resulted in more than 90% of the subject company's
shares being tendered prior to such offer's termination. In fact, Cardinal
Holding's 1988 unsolicited tender offer for Interco was such an offer;
ultimately over 93% of Interco's shares were tendered into Cardinal's
unsolicited offer prior to termination of such offer.
<PAGE>
<PAGE> 3
7. In the case of KG&E, we understand that, according to
publicly available data, KG&E management and directors own less than 1% of
KG&E's shares, and KG&E employee benefit plans own less than 5% of KG&E's
shares. In fact, it is our understanding that KG&E's employee benefit
plans have tendered approximately 730,000 KG&E common shares (about 2.3% of
KG&E's outstanding common shares) into KCPL's tender offer. Accordingly,
in our opinion, it is entirely possible that more than 90% of KG&E's
outstanding common and preferred shares will be tendered into KCPL's tender
offer, even if the parties have not entered into a negotiated transaction
at the time the tender offer is consummated.
I declare under penalty of perjury that the foregoing is true
and correct.
Executed on August 22, 1990
David V.H. Hedley
<PAGE>
A registration statement relating to the Western Resources securities referred
to in these materials has been filed with the Securities and Exchange
Commission but has not yet become effective. Such securities may not be sold
nor may offers to buy be accepted prior to the time the registration statement
becomes effective. These materials shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any state in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such state.
